By Michael Kanellos
Staff Writer, CNET
June 29, 2005 4:00 AM PT
MUMBAI, India--One of the critical ingredients for the $100 computer is probably in your garage.

In about three months, a little-known company called Novatium plans to offer a stripped-down home computer for about $70 or $75. That is about half the price of the standard "thin clients" of this kind now sold in India, made possible in part by some novel engineering choices. Adding a monitor doubles the price to $150, but the company will offer used displays to keep the cost down.

"If you want to reach the $100 to $120 price point, you need to use old monitors," said Novatium founder and board member Rajesh Jain, a local entrepreneur who sold the IndiaWorld portal for $115 million in cash in 2000 and has started a host of companies since. "Monitors have a lifetime of seven to eight years."

It is this kind of entrepreneurial thinking that has made Jain the latest visionary to seek out today's Holy Grail of home computing: a desktop that will start to bring the Internet to the more than 5 billion people around the world who aren't on it yet.

The first $100 computer is a fitting icon for a country undergoing major changes in the development of its technology, economy and society. As Indian companies increasingly break away from the limitations of handling outsourced services for Western corporations, innovations are likely to multiply and inspire the rising number of independently minded engineers and executives who are leading the country's technology industry to new frontiers.

Because of thriving exports and low PC penetration, India has become the epicenter for projects on the cutting edge of computing hardware. Advanced Micro Devices has started to sell its Personal Internet Communicator for $235, including monitor, through a broadband partner here. It says a fully equipped $100 personal computer in three years isn't out of the question.

The innovative spirit that pervades the industry is producing a variety of new approaches toward affordable computing. Tata Consultancy Services is tinkering with "domain computers" that reduce costs by just handling fixed functions such as bill payment or word processing, said Nagaraj Ijari, a senior executive in the company's operations in Bangalore.

About 200 miles away in high-tech center Chennai, formerly known as Madras, Professor Ashok Jhunjhunwala of the Indian Institute of Technology has developed a $1,000 automatic teller machine that can also serve as an Internet kiosk for villages. He has also built a wireless data system that has been exported to Brazil, Iran, Fiji and Nigeria.

Creating a product that cuts costs without reducing functions isn't easy, as exemplified by the Simputer, a handheld computer designed for the masses. And many products face formidable logistical and infrastructural obstacles.

Professor Jitendra Shah, from the Centre for the Development of Advanced Computing, is examining ways to reduce electricity usage by setting up solar-powered computing terminals that tap into battery-powered PCs acting as servers.

"We are looking at ways to take advantage of unconventional sources of power. Practically in every village you will find a truck or car battery that you can use when the regular power grid fails you," said Ketan Sampat, president of Intel India. "You also want to design something that is more tolerant of dust."

Living in a material world
The key to success for the $100 computer lies in the sum of its parts. Even though the industry has seen continuous price declines for components--including metal, plastic and other raw materials--many executives believe that manufacturing a full-fledged PC for even less than $200 is probably still impractical.

"We are not able to fix the monitor and hard-drive problem," said P.R. Lakshamanan, senior vice president of Zenith Computers, one of India's largest local PC makers.

With these realities in mind, some companies are adjusting their price goals. Xenitis, for example, has come out with PCs that cost just under $250, equipped with an older 1GHz processor from Via Technologies, 128MB of memory, a 40GB hard drive, Linux software and a 15-inch screen.

Via will join in with its own Terra PC in the fall. The Terra comes with the same basic configuration as its Xenitis competitor, but the operating system and the basic applications are loaded on a flash memory chip, not the drive--making the computer less susceptible to viruses and other problems.

Via, however, admits that it will need to select battle-hardened software. "There is no way I am going to take care of all of the problems," said Ravi Pradhan, country manager for Via. "The idea is to get as close to perfect as possible."

Others are taking a more socialistic approach to lowering costs. Intel, for instance, promotes communal arrangements that spread the cost of a computer across an entire village.

In the southern state of Kerala, Intel has helped the government launch a program that assists local entrepreneurs in lining up financing to set up an "Akshaya Center"--sort of an Internet cafe--and pays them to provide PC training to one member of each family in a village. The Akshayas also provide videoconferencing for families with overseas relatives, data entry for local cooperative banks, and links to commodity exchanges.

The system is modeled after a long-established practice in which India's ubiquitous pay phones are owned by individuals, not the national telecommunications companies. "Akshaya could become one of these programs that scales out across the country," Sampat said.

Thin is finally in
The Indian market may also finally provide an outlet for the so-called thin client, a type of basic computer tried repeatedly in North America and Europe by Oracle and Sun Microsystems with little success. Thin clients, sometimes known as network computers or "dumb terminals," effectively are used only to communicate with a server; the server itself is the device that stores the data, houses the applications, performs the calculations and connects to the Internet.

Although a server can only handle a finite number of thin clients, advocates say the systems reduce both hardware costs and support headaches.

Professor Deepak Phatak of the Indian Institute of Technology conducted a study of computer use in a bank and determined that thin clients would cost about a third as much as multifunctional personal computers. A large insurer installed 13,000 of the machines after the study, he said, and other companies are contemplating similar moves.

"Ninety-five percent of the employees only used a single application," Phatak said. "Fifteen thousand rupees ($357) gets you a thin client with support for three years."

Moreover, proponents say, these systems are more than just typical thin clients with used monitors.

"Just because we are an emerging market doesn't mean we want an inferior product," said Jain of Novatium. The engineering behind his company's base model illustrates his point.

Instead of a microprocessor, it will contain a digital signal processor that compresses and decompresses music and video files. In addition to lowering costs, the technology is designed to provide access to the full range of the Internet without bogging down the machine's operations. (Novatium would not disclose which chip brand it would use, but one of its investors is also the chairman of digital signal processor designer Analog Devices.)

Using Linux applications and software from Jain's Netcore Solutions, these machines will be tweaked so that multiple people can use them. This would reduce the cost of memory in the server that does the bulk of the computing work for the Novatium thin clients on its network.

Jain will also try to establish "operator grids," local businesses that run the servers while acting as an Internet service provider. Eventually, instead of buying their machines, he said customers could have the option of paying a grid operator $15 to $20 a month for all hardware, software and storage needs.

While acknowledging the risks inherent in any start-up venture, Jain speaks eagerly of what he calls the phenomenon of the black swan--a rare, but not impossible, event.

"Google was a black swan," he said. "No one expects the next Microsoft or Intel or Cisco to come out of India, but I believe it is entirely possible."